DEFR14A: Dror Ortho-Design Amends Proxy Statement, Reschedules Special Meeting for Key Reverse Stock Split Vote

Dror Ortho-Design, Inc. has filed an amended definitive proxy statement, rescheduling its Special Meeting to June 23, 2025, to seek stockholder approval for a reverse stock split aimed at increasing its share price and facilitating a potential uplisting to NYSE American.

Summary

• Dror Ortho-Design, Inc. (the Company) filed Amendment No. 1 to its Schedule 14A, amending and restating a Definitive Proxy Statement inadvertently filed on May 21, 2025.
• The primary purpose of this amendment is to initiate the appropriate SEC review process and change the date of the Special Meeting from June 13, 2025, to June 23, 2025.
• Stockholders will vote on two key proposals at the Special Meeting: (i) approval of an amendment to the Company's Charter to effect a reverse stock split of common stock at a ratio in the range of 1-for-2 to 1-for-2,000 (Reverse Stock Split Proposal), and (ii) approval of a proposal to adjourn the Special Meeting if necessary to solicit further proxies (Adjournment Proposal).
• The Board of Directors unanimously recommends a vote FOR both proposals.
• The reverse stock split is intended to increase the trading price of the Company's common stock to meet initial listing requirements for uplisting to NYSE American.
• As of the Record Date (May 19, 2025), there were 956,997,116 shares of Common Stock and 5,847,937 shares of Series A Preferred Stock outstanding and entitled to vote.
• The Series A Preferred Stock holders are entitled to an aggregate of 584,793,700 votes on the proposals, subject to certain beneficial ownership limitations.
• If approved, the Board will have the discretion to determine the exact reverse stock split ratio within the approved range and whether or not to effect the split prior to the one-year anniversary of stockholder approval.
• The reverse stock split will affect all stockholders uniformly, reducing the number of outstanding shares but not altering percentage ownership, except for fractional shares.
• Fractional shares will be rounded up to the nearest whole share for directly held shares, and rounded down for shares subject to awards under the 2023 Long-Term Incentive Plan.

Sentiment

Score: 6

Explanation: The sentiment is moderately positive. While the filing itself is a procedural correction, the underlying corporate action (reverse stock split for uplisting) is presented as a strategic move to improve the company's market position and access to capital, despite acknowledging inherent risks.

Positives

• The proposed reverse stock split aims to increase the trading price of the common stock, potentially satisfying initial listing requirements for uplisting to NYSE American.
• Uplisting to a national exchange like NYSE American could attract institutional investors, remove investment restrictions, and enhance the Company's profile.
• A higher per-share price could encourage increased investor interest, promote greater liquidity, and potentially lead to inclusion in market indexes and increased analyst coverage.
• The reverse stock split could reduce transaction costs for individual stockholders, as commissions on low-priced stocks generally represent a higher percentage of the stock price.

Negatives

• There is no assurance that the reverse stock split will increase the market price of the common stock or maintain any increase for a meaningful period.
• The reverse stock split will reduce the total number of outstanding shares, which may lead to reduced trading volume and a smaller number of market makers, potentially decreasing liquidity.
• The reverse stock split may result in more stockholders owning 'odd lots' (less than 100 shares), which can incur incrementally higher trading costs.
• The market may view the reverse stock split negatively, potentially leading to a decrease in the Company's overall market capitalization if the per-share price does not increase proportionally.

Risks

• The reverse stock split may not increase the price of the common stock over the long-term or at all, as market price is affected by many factors unrelated to the number of shares outstanding.
• The reverse stock split may decrease the liquidity of the common stock due to a reduced number of outstanding shares and potentially fewer market makers.
• Stockholders owning odd lots (less than 100 shares) after the split may face higher transaction costs per share when selling.
• The reverse stock split could lead to a decrease in the Company's overall market capitalization if the per-share price does not increase proportionally to the split ratio.

Future Outlook

The Company anticipates that the proposed reverse stock split, if approved and implemented, will increase its common stock trading price sufficiently to meet initial listing requirements for NYSE American. This move is expected to attract institutional investors, enhance marketability, and support future capital-raising efforts for growth plans. However, there is no guarantee that the price increase will be sustained or that the uplisting will be successful.

Management Comments

• "On behalf of the Board of Directors (the Board) of Dror Ortho-Design, Inc. (the Company, Dror, our or we), I cordially invite you to attend our 2025 special meeting of stockholders (the Special Meeting) at 10 a.m. Eastern Time on Monday, June 23, 2025." Chaim Hurvitz, Chairman of the Board of Directors.
• "We urge you to review these materials carefully and to vote your shares electronically via the Internet or by completing and returning the proxy card or voting instruction form."
• "The Board recommends the approval of each of the two proposals."
• "The Board unanimously recommends that you vote FOR proposals 1 and 2."
• "The Board intends to effect the Reverse Stock Split only if it believes that a decrease in the number of shares outstanding is in the best interests of the Company and our stockholders and is likely to improve the trading price of our Common Stock and improve the likelihood that we will have the ability to uplist to a national exchange."

Industry Context

The proposed reverse stock split by Dror Ortho-Design, Inc. is a common strategy employed by companies, particularly those with low stock prices, to meet exchange listing requirements (e.g., minimum bid price) and enhance their appeal to a broader investor base, including institutional funds. This action aligns with a broader trend where companies seek to improve their market perception and access to capital by moving to more prestigious exchanges, which often have stricter listing criteria.

Comparison to Industry Standards

• The proposed reverse stock split ratio range of 1-for-2 to 1-for-2,000 is broad, providing the Board significant flexibility, which is a common practice to adapt to market conditions at the time of implementation.
• The stated goal of uplisting to a national exchange like NYSE American is a standard objective for companies seeking increased visibility, liquidity, and access to institutional capital, similar to other small-cap companies in the medical device or biotech sectors that aim for broader market exposure.
• The risks associated with reverse stock splits, such as potential for continued price decline, reduced liquidity, and creation of odd lots, are well-documented and consistent with industry experience for companies undertaking such actions.

Corporate Governance

Stakeholder Impact

• **Shareholders:** Will own fewer shares after a reverse stock split, but their percentage ownership will remain the same (except for fractional shares). May experience higher per-share trading prices and potentially improved liquidity. Those with odd lots may face higher transaction costs.
• **Potential Investors:** A higher share price and potential uplisting to NYSE American could make the stock more attractive to institutional investors and a broader range of funds that have minimum price thresholds or require national exchange listings.
• **Company Management/Board:** Gains flexibility to manage share price and pursue uplisting, which could enhance the company's standing and facilitate future capital raising.

Next Steps

• Stockholders to vote on the Reverse Stock Split Proposal and Adjournment Proposal at the Special Meeting on June 23, 2025.
• If the Reverse Stock Split Proposal is approved, the Board will determine the exact ratio and decide whether and when to effect the reverse stock split prior to the one-year anniversary of approval.
• The Company will file a Current Report on Form 8-K with the SEC within four business days of the Special Meeting to disclose preliminary voting results, and an amendment if final results are not immediately available.

Key Dates

Keywords

Reverse Stock Split, SEC Filing, Proxy Statement, Corporate Governance, Stockholder Meeting, NYSE American Uplisting, Common Stock, Series A Preferred Stock, Capital Markets, Liquidity, Share Price, Dror Ortho-Design